The Department of Minerals and Energy could implement a retail petrol-price cut of about nine cents per litre (c/l) on November 1 2006, provided the daily over-recovery remains at or above the October 18 level.
This would bring the total cut to 95c/l since the retail petrol price peaked at R7,04 a litre in August in Gauteng. The price was cut by 36c/l in September and by a further 50c/l in October.
South Africa’s daily unleaded petrol price over-recovery rose to 3,526c/l on October 18 from 2,777c/l on October 17.
An over-recovery means that the basic petrol price based on the daily product price and exchange rate is less than the basic fuel price used in the calculation of the monthly retail petrol. It therefore implies that the retail petrol price can be lowered at the next monthly price adjustment, provided the government does not introduce a new levy or raise either the wholesale or retail margin.
The retail petrol price is adjusted monthly on the first Wednesday of the month in accordance with the previous averaging period’s over- or under-recovery.
The current averaging period runs from September 29 to October 26 and a price announcement is due on October 27. The average over-recovery for the period September 29 to October 18 was 13,714c/l.
The Organisation of the Petroleum Exporting Countries (Opec) reference basket of 11 crude oils saw its price drop from a record $72,67 per barrel on August 8 to $54,10 on October 10, before recovering to $56,17 on October 17. It then dipped to $55,27 on October 18. It was last above $60 per barrel on September 12.
South Africa’s international petroleum product prices are closely correlated with the Opec reference basket, rather than Brent or Nymex crude-oil futures prices, which tend to be higher than those of the reference basket. — I-Net Bridge